The International Monetary Fund (IMF) has projected that Nigeria will use more than half of its revenue to service debt in 2026, raising concerns about the amount of money available for critical sectors of the economy.
According to the IMF’s latest country assessment, the Federal Government’s interest payments are expected to consume 53.7 percent of total revenue in 2026, slightly higher than the 53.2 percent projected for 2025 and significantly above the 40.8 percent recorded in 2024.
The IMF also forecasts that the figure will remain high in 2027, easing only slightly to 52.4 percent.
Despite the concerns, the global financial institution maintained that Nigeria’s debt remains sustainable and that the country is not currently facing a high risk of debt distress.
Speaking during an interview on ARISE Television, IMF Resident Representative for Nigeria, Christian Ebeke, explained that Nigeria’s debt profile compares favourably with many countries due to its relatively moderate debt-to-GDP ratio.
“Our latest assessment in the Article IV that we just published on June 9 basically concludes that Nigeria’s debt is sustainable. And second, the risk of sovereign stress is actually moderate. So we don’t see Nigeria as a high-risk debt-distressed country,” Ebeke said.
However, he warned that the real challenge lies in the large share of government revenue being spent on debt repayments.
“When you have more than 50 percent of your tax collection devoted to repaying interest on your federal government debt, it leaves you very little room to actually pay for health, education, cash transfer, including security,” he stated.
The IMF also projected improvements in some key economic indicators.
According to the report, average inflation is expected to decline to 16 percent in 2026, while Nigeria’s gross international reserves could increase from $40.2 billion in 2024 to $58.1 billion in 2026 and $62 billion in 2027.
Ebeke stressed that improving domestic revenue generation remains crucial for Nigeria’s long-term fiscal stability.
He noted that effective implementation of recently enacted tax reforms would help boost government revenue, reduce financial pressure, and create more room for spending on essential public services.
The IMF said stronger revenue mobilisation, alongside prudent fiscal management, would be key to reducing Nigeria’s debt-service burden in the coming years.
Source: International Monetary Fund (IMF) Article IV Assessment / ARISE Television Interview.
